Private Equity in Africa: Emerging Trends

Private equity in Africa has come a long way since the early 1990s, which saw development financial institutions (DFIs) investing in government initiated development projects across the continent. The period that followed was characterised by the emergence of a limited number of South African focused PE funds, which over the next decade started to invest more widely across the continent. By 1997, there were 12 private equity funds that had collectively raised US$1bn to invest in Africa.

As we fast forward to 2017, the African PE ecosystem has significantly matured with over 200 PE funds managing upwards of US$30bn targeting Africa and unprecedented capital formation in 2014-2015 which saw over US$7bn raised to invest in Africa, including the first billion dollar sub-Saharan African funds, Helios Investors III and Equatorial Guinea Co-Investment Fund.

With the new narrative of 'Africa Rising' that pervaded the media from 2000 and in the aftermath of the 2008 economic crisis, PE funds increasingly turned to emerging markets for levels of growth that were unattainable elsewhere. Although certain countries on the continent have experienced headwinds in recent years, one thing we can be certain of is that African PE has significantly evolved over time. Many features typically reserved for PE transactions in Europe and North America are becoming increasingly prevalent in African PE.